A surplus of cash can mean financial stability, but it can also indicate a reluctance (or inability) to invest in growth. Some of these companies also face challenges like stagnating revenue, declining market share, or limited scalability.
Just because a business has cash doesn’t mean it’s a good investment. Luckily, StockStory is here to help you separate the winners from the losers. Keeping that in mind, here is one company with a net cash position that can leverage its balance sheet to grow and two best left off your watchlist.
Two Stocks to Sell:
Zillow (ZG)
Net Cash Position: $830 million (4.1% of Market Cap)
Founded by Expedia co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ:ZG) is the leading U.S. online real estate marketplace.
Why Should You Dump ZG?
- Annual revenue declines of 7.8% over the last five years indicate problems with its market positioning
- Historical operating margin losses point to an inefficient cost structure
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $81.89 per share, Zillow trades at 43.2x forward P/E. Read our free research report to see why you should think twice about including ZG in your portfolio.
The Real Brokerage (REAX)
Net Cash Position: $54.77 million (5.8% of Market Cap)
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ:REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.
Why Is REAX Not Exciting?
- Poor expense management has led to operating margin losses
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
- Poor free cash flow margin of 3.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
The Real Brokerage is trading at $4.52 per share, or 16.9x forward EV-to-EBITDA. If you’re considering REAX for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Blue Bird (BLBD)
Net Cash Position: $81.57 million (4.5% of Market Cap)
With around a century of experience, Blue Bird (NASDAQ:BLBD) is a manufacturer of school buses and complementary parts.
Why Are We Backing BLBD?
- Impressive 14.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Additional sales over the last two years increased its profitability as the 317% annual growth in its earnings per share outpaced its revenue
- Rising returns on capital show management is finding more attractive investment opportunities
Blue Bird’s stock price of $57.30 implies a valuation ratio of 14.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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